FINANCIAL ANALYSIS

Managing financial resources and decisions

Managing financial resources and decisions

Answer # 1.1

In today's market food and coffee businesses are doing well. Therefore, we decided to start up a coffee house. In this regard, there are a number of sources available but the most important thing is which one is suitable for the business. Keeping in view the needs and the market of coffee business there are three important sources through which the business can generate funds. These sources are as follows:

Debt Financing (From Banks)

Equity Financing (From Family and other relatives)

From other investment companies (Angel Investors).

For the initial setup a business needs more funds as on initial basis it there are more risk too. The business which we are starting is ABC coffee house. Initially the ABC coffee house needs: $20,000.

Answer # 1.3(Advantages & Disadvantages of Funds)

For the coffee house the evaluation of the sources of funds are necessary because in initial stages and its implication and analysis decide its future. For example: Businesses in their initial stages didn't go for debt financing because every month they have to pay a particular amount to the bank. The bank is not concerned with what the situation is going on but the only thing they need is their monthly installment. If the business fail's to pay the installment they also can do some legal action against them. One the other hand, they also have to leans some property as a mortgage asset.

Equity financing on the other hand is a good option in initial phase because it is the money of financers and therefore, no such collateral is required. This can also be taken from the family and relatives so it is relatively easily as compared to other main sources.

Answer 1.3)

The coffee company can mastermind finances for its new business from broadened sources; notwithstanding, every source has certain preferences and inconveniences along these lines making determination of suitable sources a testing assignment for organizations over the globe. For example, if organization chooses to contribute utilizing particular recovering and stakes that it might lessen the procurement expense, an organization does not need to pay premium upkeep and does not have offer the comes back within the cards speculators.

On the other hand, impairments of utilizing particular money or different stakes is that a singular can lose everything that he once possessed and therefore it might come to be challenging for the single person to adapt to unwanted circumstances. Then again, possible speculators could empower the organization to create thorough supports for the launch of new business; these moguls could assume an indispensable part in performing business objectives, furnish underpin in challenging scenario.

Then again, weakness of including moguls all hands on deck is that organization needs to exchange certain forces to these gurus, it needs to impart benefit, and chance on equivalent extent, fulfilling client might come to be organization major authority regardless of predominant scenarios.

Getting up and go the grandest preference of obtaining advance from bank is that in empower the organization to utilize the ...